Financial Maths, SMB-025

Brad investigated the cost of buying a $720 washing machine under a hire purchase agreement.

A 25% deposit is required and the balance will be paid in 24 equal monthly repayments of $27.90.

Calculate the amount of interest Brad pays on this purchase. (3 marks)

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`$129.60`

Show Worked Solution

`text{Deposit} = \dfrac{25}{100} xx 720 = $180`

`text{Total instalments} = 24 xx 27.90 = $669.60`

`text{Total purchase price} = 180+669.60 = $849.60`

`text{Interest paid} = 849.60-720= $129.60`